HOUSE prices look set to continue falling as the hoped-for spring bounce in the property market failed to materialise.

The extended bank holiday weekends in April and early May hit activity levels, while concerns about the economy and the ongoing problems in the mortgage market also affected the number of people looking to move home, according to the Royal Institution of Chartered Surveyors.

The average number of properties sold per estate agent branch fell to its lowest level since the start of the year at just 14.7%, while there was little sign of a renewed appetite to view properties among househunters.

About 2% more surveyors reported a fall in enquiries from potential buyers than those who saw a rise, with many blaming the bank holidays for the subdued demand.

But the number of people putting their homes up for sale continued to rise, with a balance of 15% of surveyors reporting an increase in instructions.

The mismatch between supply and demand put further downward pressure on prices, with a balance of 28% of surveyors reporting further falls, the highest level since the beginning of the year.

However, 82% of these surveyors said the declines were between just 0% and 2%.

Surveyors remain gloomy about the market’s prospects going forward, with 27% more expecting prices to continue falling than those who think property values will recover.

But they are slightly more optimistic about sales levels, with a balance of 9% expecting the number of homes changing hands to increase during the coming months.

RICS housing spokesman Ian Perry said: “Buyer interest in purchasing property remains flat across much of the country and there is little sign of this changing any time soon.

“Uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand.”

The RICS survey is in line with figures released by Halifax and Nationwide for May, which also pointed to a subdued market.

Halifax said house prices remained broadly unchanged during the month, rising by just 0.1%, while Nationwide said they crept ahead by 0.3%.

There continued to be a significant divergence between the housing market in London and the rest of the UK during May, according to the RICS.

London was the only region in which surveyors reported price rises during the month, with property values continuing to fall across the rest of the country.

The West Midlands had the highest balance of surveyors who reported further price drops at 64%, followed by Wales and Northern Ireland, both at 43%.